"Microsoft is continuing its investigation of public reports of attacks against a new vulnerability in Internet Explorer," said the firm in a security advisory alert about the flaw.

Microsoft says it has detected attacks against IE 7.0 but said the "underlying vulnerability" was present in all versions of the browser.

Other browsers, such as Firefox, Opera, Chrome, Safari, are not vulnerable to the flaw Microsoft has identified.

Browser bait

"In this case, hackers found the hole before Microsoft did," said Rick Ferguson, senior security advisor at Trend Micro. "This is never a good thing."

As many as 10,000 websites have been compromised since the vulnerability was discovered, he said.

"What we've seen from the exploit so far is it stealing game passwords, but it's inevitable that it will be adapted by criminals," he said. "It's just a question of modifying the payload the trojan installs."

MICROSOFT SECURITY ADVICE

Change IE security settings to high (Look under Tools/Internet Options)

Switch to a Windows user account with limited rights to change a PC's settings

With IE7 or 8 on Vista turn on Protected Mode

Ensure your PC is updated

Keep anti-virus and anti-spyware software up to date

Said Mr Ferguson: "If users can find an alternative browser, then that's good mitigation against the threat."

But Microsoft counselled against taking such action.

"I cannot recommend people switch due to this one flaw," said John Curran, head of Microsoft UK's Windows group.

He added: "We're trying to get this resolved as soon as possible.

"At present, this exploit only seems to affect 0.02% of internet sites," said Mr Curran. "In terms of vulnerability, it only seems to be affecting IE7 users at the moment, but could well encompass other versions in time."

PC Pro magazine's security editor, Darien Graham-Smith, said that there was a virtual arms race going on, with hackers always on the look out for new vulnerabilities.

"The message needs to get out that this malicious code can be planted on any web site, so simple careful browsing isn't enough."

"It's a shame Microsoft have not been able to fix this more quickly, but letting people know about this flaw was the right thing to do. If you keep flaws like this quiet, people are put at risk without knowing it."

"Every browser is susceptible to vulnerabilities from time to time. It's fine to say 'don't use Internet Explorer' for now, but other browsers may well find themselves in a similar situation," he added.

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